Dubai (Reuters) – The International Monetary Fund cut its 2023 GDP growth projection for Saudi Arabia to 1.9% in its latest World Economic Outlook update released on Tuesday, to reflect the impact of prolonged oil production cuts.
The IMF revised its growth forecast for the world’s top oil exporter from 3.1% projected in its May regional outlook; in June, it said growth could ease to 2.1% in 2023.
“The downgrade for Saudi Arabia for 2023 reflects production cuts announced in April and June in line with an agreement
through OPEC+…whereas private investment, including from “giga-project” implementation, continues to support strong non-oil GDP growth,” the IMF said in its report on Tuesday.
The Saudi economy grew 8.7% last year, as high oil prices boosted revenue and led to the kingdom’s first budget surplus in almost 10 years.
But global macroeconomic worries and an uncertain demand outlook have weighed on prices, pushing growth projections lower.
The world’s top oil exporter said earlier this month it would prolong an extra production output cut on top of a broader OPEC+ deal, and has raised prices for most of its crude to Asian customers in August for a second month.
The bigger than expected slowdown in Saudi growth this year will also weigh on overall growth in the Middle East and Central Asia region, which is projected to decline to 2.5% in 2023, from 5.4% last year, the IMF said.
